Rows of rendered gold bars and one silver bar | Photocredit: wydyndynd
While US President Donald Trump was on the world, Gold continued to climb in Lockstep to achieve a succession of record highs.
The precious metal reached a new peak of $ 3,245.28 per ounce on 11 April and has risen 28 percent since he reached a low point of $ 2,536.71 on November 14, shortly after Trump’s victory that returned to the White House to start his second term in January.
In some respects, gold functions exactly as it should.
It offers investors a safe port of the chaos that has covered many financial markets since the fatal “Liberation Day” rate announcements of Trump on 2 April.
The imposition of massive rates for most American trading partners, with the false claim that they were mutual, sent shares, bonds and some raw materials in reverse way.
Trump’s subsequent 90-day partial climb from rates to a basis of 10 percent on each country, apart from the now 145 percent imposed on China, it is not largely sent to calm the nerves and to offer stability that financial markets generally go to hunging.
The uncertainty has also led to some serious questions that are asked about the role of American treasuries such as the ultimate safe Havenactief, whereby investors wonder whether this role is undermined by Trump’s rates.
Benchmark US 10-year-old Treasury returns booked their largest weekly increase in more than two decades last week, ending at 4.478 percent on 11 April, an increase of 8.6 basic points.
The nerves about the role of the US dollar as the Global Reserve -currency and American treasuries such as the safest port are undoubtedly positive for gold.
Gold -hedger
The problem for gold is that it is also a hostage for Trump’s irregular and inconsistent trade and economic policy as any other active.
If Trump continues his trade war against China and increases the rates of the 10 percent base on other countries after his 90-day break, then it is likely that gold will continue to gather.
But if a compromise with Beijing is worked out with which both parties can save the face, and reach other countries with Trump that largely retain world trade, the case for gold looks less safe.
The dilemma is that working out what the likely process is of Trump’s rate war is a gambling game at best.
Perhaps the safest assumption is that when it covers dust, the United States probably still have the highest average rates on import since the 1930s.
This will probably shrink economic growth and accelerate inflation, but perhaps more in the United States than all over the world.
In this case, gold continues to gather strongly, since different investment banks are now predicting, an example is that Goldman Sachs cancel its 2025 -purpose white to $ 3,700 per ounce on 11 April.
Or does the fear of fear disappear and does the more traditional drivers of Gold buy the central bank and the physical question in China and India again comes into play?
China Premium
Certainly, a step away from American treasuries will probably stimulate gold purchases, especially in China, the world’s best gold buyer.
The question of Chinese consumers can also stop uncertainty about the Outlook for shares, and this dynamic is reflected in the rising premium for spot purchases
But unlike China, the high gold prices will probably curb consumer demand in India, the second largest buyer of the precious metal.
There are already some signs of consumer stress in India, with the discount for buying gold
It has since been found to a discount of $ 11 per ounce on 11 April, but even at this level it is still far below the premium of $ 16 from November 15, shortly after Trump’s victory.
If the general question of the gold is seen as a three -gang stool of investors’ demand, buying the central bank and purchasing consumers in China and India, all three are currently supported.
With the exception of India’s demand, all legs are also kept by Trump’s policy, which means that although gold functions as a safe haven, it is probably subject to the same volatility as other assets.
The views expressed here are those of the author, Clyde Russell, a columnist for Reuters.
Published on April 14, 2025
